4 Dec 2008

Government reveals extra $1.3b needed for ACC

8:03 pm on 4 December 2008

The Government has revealed an extra $1.3 billion is needed by the Accident Compensation Corporation to cover non-work accidents over the next three years.

The National-led Government says it is very concerned about the scale of the recommended increases, which will be a very signficant cost increase for workers.

On Tuesday, it ordered an inquiry, claiming the previous Labour government had underfunded ACC by about $1 billion for the coming three years.

Prime Minister John Key said ministers had been told by officials that ACC is seeking $297 million in extra funding for the Non-Earners Account in the 2007-08 year, and a similar amount for the two years after that.

On Thursday, ACC Minister Nick Smith said he had now been advised to significantly increase the ACC Earners Levy, which is paid for by employee levies.

Dr Smith said the recommended rise means someone earning the average wage would have to pay an extra $282 in the next tax year.

He said the blow-out is being blamed on a rise in the number of claims and increased medical and treatement costs.